Robert Half(RHI) - 2021 Q1 - Quarterly Report

PART I—FINANCIAL INFORMATION Financial Statements This section presents Robert Half International Inc.'s unaudited condensed consolidated financial statements for Q1 2021, including financial position, operations, and cash flows Condensed Consolidated Statements of Financial Position | | March 31, 2021 (in millions) | December 31, 2020 (in millions) | | :--- | :--- | :--- | | Total current assets | $1,873.92 | $1,842.74 | | Total assets | $2,565.17 | $2,557.42 | | Total current liabilities | $1,076.59 | $1,046.63 | | Total liabilities | $1,367.47 | $1,352.14 | | Total stockholders' equity | $1,197.70 | $1,205.29 | Condensed Consolidated Statements of Operations | | Three Months Ended March 31, 2021 (in millions) | Three Months Ended March 31, 2020 (in millions) | | :--- | :--- | :--- | | Service revenues | $1,398.38 | $1,506.69 | | Gross margin | $561.71 | $614.39 | | Income before income taxes | $150.11 | $131.76 | | Net income | $110.60 | $89.92 | | Diluted net income per share | $0.98 | $0.79 | Condensed Consolidated Statements of Cash Flows | | Three Months Ended March 31, 2021 (in millions) | Three Months Ended March 31, 2020 (in millions) | | :--- | :--- | :--- | | Net cash flows provided by operating activities | $68.06 | $124.93 | | Net cash flows used in investing activities | ($15.45) | ($28.35) | | Net cash flows used in financing activities | ($123.80) | ($110.50) | | Change in cash and cash equivalents | ($76.50) | ($20.56) | | Cash and cash equivalents at end of period | $497.93 | $249.91 | Notes to Condensed Consolidated Financial Statements The notes detail significant accounting policies, revenue recognition, business segments, and other financial statement items, including disaggregated revenue and segment income - The company operates through three main segments: temporary and consultant staffing, permanent placement staffing, and risk consulting and internal audit services (Protiviti)[23][27][92] | Service Revenues by Line of Business (in millions) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Temporary and consultant staffing | $889.28 | $1,092.12 | | Permanent placement staffing | $111.70 | $120.49 | | Risk consulting and internal audit services | $397.40 | $294.08 | | Total Service revenues | $1,398.38 | $1,506.69 | | Segment Income (in millions) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Temporary and consultant staffing | $75.54 | $93.76 | | Permanent placement staffing | $17.78 | $10.91 | | Risk consulting and internal audit services | $57.32 | $26.47 | | Combined segment income | $150.64 | $131.14 | - The company is involved in two putative class action lawsuits in California concerning employee compensation and classification, for which it is not feasible to predict the outcome or a range of loss[78][79] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 2021 financial results, highlighting an early recovery with overall revenue decreasing 7.2% to $1.40 billion, and Protiviti's revenues growing 35% Executive Overview - Q1 2021 financial results reflect an early-cycle recovery from the COVID-19 pandemic, with service revenues of $1.40 billion, a decrease of 7.2% from the prior year[101] - Staffing operations outperformed historical sequential trends, led by small and medium-sized businesses and a 22% sequential growth in permanent placement[102] - Protiviti (risk consulting) revenues grew 35% year-on-year, marking its 14th consecutive quarter of YoY revenue gains, with strong demand for managed solutions with staffing[102] Results of Operations | Segment Revenue Growth (YoY Q1 2021) | As Reported | As Adjusted | | :--- | :--- | :--- | | Temporary and consultant staffing | -18.6% | -18.9% | | Permanent placement staffing | -7.3% | -8.1% | | Risk consulting and internal audit services | +35.1% | +34.7% | - Temporary and consultant staffing revenue decreased primarily due to fewer hours worked by engagement professionals[120] - Risk consulting and internal audit services (Protiviti) revenue increased due to a rise in billable hours[123] - Overall gross margin dollars decreased 8.6% to $562 million; as a percentage of revenue, gross margin for temporary staffing increased to 38.8% from 37.8%, while for risk consulting it decreased to 26.5% from 27.6% on a reported basis[124][125][128] - Selling, general and administrative (SG&A) expenses decreased 4.5% to $423 million; as a percentage of revenues, adjusted SG&A was 29.5% in Q1 2021 compared to 31.8% in Q1 2020[129] Liquidity and Capital Resources | Cash Flow Summary (Three Months Ended March 31, 2021) | Amount (in millions) | | :--- | :--- | | Cash from Operating Activities | $68 | | Cash used in Investing Activities | ($15) | | Cash used in Financing Activities | ($124) | | Cash and cash equivalents at end of period | $498 | - Financing activities in Q1 2021 included $80 million in common stock repurchases and $44 million in dividend payments[146] - The company has a $100 million unsecured revolving credit facility, with no borrowings as of March 31, 2021[150] - A quarterly dividend of $0.38 per share was announced on April 29, 2021[151] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is foreign currency fluctuations, with 23% of Q1 2021 revenues from outside the U.S - For Q1 2021, 23% of revenues were generated outside the United States, exposing the company to foreign currency risk[155] - In Q1 2021, currency exchange rates increased reported net service revenues by $22.6 million (1.5%) and net income by $0.8 million (0.9%) compared to the prior year period[156] Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2021 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[158] PART II—OTHER INFORMATION Legal Proceedings No material developments in legal proceedings have occurred since the 2020 Annual Report on Form 10-K - No material developments occurred in legal proceedings previously disclosed in the 2020 Form 10-K[161] Risk Factors No material changes were reported for the risk factors previously disclosed in the 2020 Annual Report on Form 10-K - No material changes were reported for the risk factors previously disclosed in the 2020 Form 10-K[162] Issuer Purchases of Equity Securities This section details the company's common stock repurchases during Q1 2021, totaling 1,048,029 shares | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 1 - Jan 31, 2021 | — | $— | | Feb 1 - Feb 28, 2021 | 246,623 | $76.79 | | Mar 1 - Mar 31, 2021 | 801,406 | $76.53 | | Total Q1 2021 | 1,048,029 | | - As of March 31, 2021, 9,151,000 shares remained authorized for repurchase under the company's publicly announced plan[163][164]